Bitcoin has its best day since March after cooler inflation data in April

Bitcoin stocks jumped on Wednesday after April’s consumer price index showed inflation eased from the previous month.

The cryptocurrency rose more than 7% to $66,124.59, according to Coin Metrics, marking its best day since March 25. It is also trading above its 50-day moving average for the first time since April 13.

“The slightly smaller-than-expected CPI number modestly increased the chance of a rate cut, which is still a strong influence on the price of bitcoin,” Owen Lau, an analyst at Oppenheimer, told CNBC. “After the ETF and the halving, the next major catalyst is the interest rate cut. Bitcoin will likely remain range-bound and trade alongside macro data points until we see a clearer path to a rate cut.”

The consumer price index, a broad measure of how much goods and services cost at the till, rose 0.3 percent from March, the Labor Department’s Bureau of Labor Statistics said Wednesday. That was slightly below the Dow Jones estimate of 0.4%. Consumer prices continued to grow by 3.4% compared to the previous year.

“With the US core CPI cooling for the first time in six months, we may see a resurgence of investor appetite for risk assets like crypto, prompting more flows into bitcoin spot ETFs, which have been particularly quiet over the past week,” said Leena ElDeeb, analyst at 21Shares.

“Although with rate cuts still in question, the recovery may be slow,” she added. “Typically, higher interest rates make risky assets like tech stocks and bitcoin less attractive, as investors can secure significant gains from safer options like U.S. Treasuries.”

Bitcoin has a unique position as both a risk asset and a risk asset, and many investors have a long-term view of the crypto asset, ElDeeb explained, adding that while the Fed’s policies may cause volatility for bitcoin in the short term, it does not fundamentally change the long-term trajectory of bitcoin.

Recently, bitcoin has been more heavily influenced by macro factors, with industry catalysts such as the launch of bitcoin exchange-traded funds and the halving in the rearview mirror. Earlier this week, Bitcoin also experienced a two-day resurgence of meme mania.

With Wednesday’s gain, bitcoin is now up 8.92% for the week – its best week since March 29 – and on course to snap a six-week slump.

Bitcoin has held between $60,000 and $70,000 — minus a few bounces above and below that range — since March, when it hit new record highs and quickly retreated. Investors and analysts expect the cryptocurrency to remain range-bound for several more months, in the absence of strong catalysts.

— CNBC’s Jeff Cox and Nick Wells contributed reporting.